Microsoft talks about $300 Elite, HDMI cables, hard drives

It's official: the Xbox 360 Elite will now be a $300 system. We chat with …

It's hard to find many surprises in gaming hardware announcements these days, and Microsoft has just confirmed something we've known for a very long time: starting this Friday, August 28, the Xbox 360 Elite with the 120GB hard drive will be sold for $299.99, and the Pro hardware with the 60GB hard drive will go for $249.99, while supplies last. Aaron Greenberg, Microsoft's Director of Product Management for Xbox 360 and Xbox LIVE, gave us a call to share the news. "We're going to shock you if you've been either traveling for a long time, or you don't read your own site," he said, laughing, before confirming the price drop.

And make no mistake, Microsoft considers this a price drop, not simply a hardware upgrade.

"It's absolutely a price drop. We're taking the black Elite with the 120GB hard drive and dropping the price $100, to $299.99," he told Ars. "We absolutely believe it's a price drop, and at the same time we're simplifying the SKU line up down to 2 SKUs: the Elite and the Arcade."

That means no more Pros will be available at retail, so if you're interested in the $250 price for the system, act quickly. "We've tried to ramp down the supply as much as we can, so it depends on retail and what particular state you're in," Greenberg explained when we asked how many units would be available. "By the heavy holiday season we will have sold through most of them, if not all of them. If you want one, now is a great time to buy one, while they're still available."

Little love for HDMI

We asked about the lack of HDMI cables in the Elite package, and his answer was interesting. "When we originally launched the Elite, we added the Elite as a third SKU, a premium SKU; we sort of threw the kitchen sink in there." He points out that when the Elite launched, HDMI cables were being sold for $50 or more. Now? You can pick one up for a few bucks. "The perceived value has changed," he claims.

Besides, gamers simply weren't getting anything out of its inclusion. "According to our research, most of the customers who bought the Elite weren't using the HDMI. We've removed it, and passed it on as part of our price savings," Greenberg told Ars.

He also points out the power of the $200 Arcade model in the current market. "First, most of our volume has come from the higher price point SKUs; the Arcade does not make up the majority of our sales. That said, the Arcade is a big part of our growth year over year... If the consumer comes in with $200 in their pocket, we're the only system they can afford." The surprising fact? The majority of customers who buy the Arcade don't add a hard drive at a later date.

Greenberg points out all the content you don't need storage for: streaming via Netflix (and later, the Zune video store), the upcoming Twitter update and Last.fm. He also noted that the storage included inside the Arcade hardware has been upped to 500MB, standard. Even without the hard drive "you'll have great online experiences," he said.

Leaks aren't a big deal

This isn't a reaction to the PS3 price drop; Greenberg claims the two price cuts being announced within a week of each other is mostly coincidence. "We actually planned this months in advance. We plan the strategy for the life cycle years in advance," he explained.

Greenberg also points out that it's important to work with retail to have signage printed, circulars ready to go, and displays ready to... well, display.

"The downside to that type of coordination is you have a lot of people touching assets in advance and you are more susceptible to leaks," he said. The leaks don't bother Microsoft. "It doesn't surprise us. We expect it, to be honest. This isn't our first rodeo. We know what to expect."

He said that Sony doesn't work as closely with retail before its announcements, and claimed that Microsoft sees a stronger lift with its tighter planning with the retail chains. "We think it's the right strategy."

The field had been leveled

It's hard to believe that when you spend $300 for either the PS3 or Xbox 360 Elite you don't get high-definition cables in either package. Is anyone going to be happy opening these boxes to find composite cables? Sure, you can buy an HDMI cable for $5 if you're willing to look, but shouldn't there be some sort of HD cabling solution included? If either Sony or Microsoft changes its mind and includes HD cables in the box, they'll have added a nice talking point for very little money.

Microsoft also doesn't seem to have any incentive to drop the price on storage. You can now get 120GB for $300, and if you go by the company's data, Arcade owners seem to be content with the built-in storage. Still, without including a hard drive, you take away the ability for developers to optimize loading times by including it, although the install option added to the New Xbox Experience is a decent compromise.

The console wars continue, now with lower-priced consoles that give you more features. People will argue bitterly over which system is "better," but both are more affordable, and better than ever. This is a great time to be a gamer.